L#Liquidations

What is Liquidation?

In futures trading, when you use leverage, you're borrowing money to trade a bigger position.

Liquidation happens when the market moves against your trade too much, and your balance isn't enough to cover the loss. The system then automatically closes your position to prevent further loss — and you lose your initial money (called "margin").

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Simple Example:

You're trading with $100 using 10x leverage, so your position is worth $1,000.

If the market moves just 10% against you:

You lose $100 (which is your margin),

Binance liquidates your position,

You lose your full $100 — even though the price only dropped a little.

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Main Risks of Futures Trading:

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Final Tip:

If you're new, start with spot trading, or use low leverage (2x–3x max) in futures until you're confident.